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Employers use exclusions to get round agency regulations

Employers use exclusions to get round agency regulations

Two-thirds use methods such as Swedish derogation or short term assignments

Around two-thirds of businesses have taken advantage of legal exclusions to lessen the impact of the Agency Workers Regulations (AWR) introduced six months ago, according to a study from law firm Eversheds.

With the regulations stating that agency workers employed for 12 weeks must be given equal pay and conditions as permanent staff, tactics such as & lsquo;Swedish derogation’ – where the individual is employed directly by the agency – have become increasingly popular. Around 17 per cent of employers have used Swedish derogation, found the survey, while other methods used include taking on a succession of short-term placements or using the services of self-employed people.

Perhaps because of this, the regulations have not been as costly to employers as many feared, said Richard Sheldon, associate at Eversheds.

“Four years ago a very large proportion of respondents to one of our studies (80 per cent) told us that they feared a hike in costs once the regulations took effect,” said Sheldon.

"More recent feedback suggests considerably fewer organisations have encountered a rise in their overall UK labour costs although, clearly, some of the impact will have been absorbed – or avoided – in other ways in the long run up to the regulations.

“What proved particularly revealing is the extent to which the responses suggest many employers are avoiding the worst of the impact currently, by relying on exclusions from the regulations.

"Interestingly, and despite some resistance from trade unions and employee representatives, use of Swedish Derogation Contracts appears wider than was anticipated, possibly as awareness of such contracts has increased.”

Previous research had indicated that only 12 per cent of firms were planning to adopt Swedish derogation, so the 17 per cent figure represents a considerable increase, he added. Supermarkets Tesco and Morrisons are among large employers who are using the tactic.

There is some evidence that employers are taking on more permanent staff and fewer temps as a result of the regulations. The latest labour market data from the Recruitment and Employment Confederation (REC) found that permanent recruitment is currently growing at a much faster rate than the increase in temporary placements.

“Some of the rise in permanent placements appears to stem from employers simply switching temporary workers to permanent status due to the higher entitlements that the Agency Worker Regulations have given them,” commented Ronnie McCombe, partner at KPMG.


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